San Francisco Could Soon Take a Punitive Approach to Curbing Empty Storefronts

San Francisco could soon be taking a new approach to combat the rash of empty storefronts across the city.

Next Tuesday, March 3, residents of the City by the Bay will vote on Prop D, a measure that would charge owners of property that has been vacant for more than 182 days a tax of $250 per linear foot. The levy would double to $500 the following year and increase to $1,000 per year with three or more consecutive years of vacancy. The measure needs two-thirds approval to pass.

City Controller Ben Rosenfield said implementation of the tax could drive up to $5 million in revenue for San Francisco, with revenues to go up in the case of economic downturn. If Prop D passes, the city will establish the Small Business Assistance Fund, said Rosenfield, with revenues to go toward maintenance and operation of the city’s small businesses.

Proponents of Prop D say San Francisco’s rising property values have led landlords to sit on empty storefronts, waiting for high-paying renters to come along. Across the city’s 40 or so commercial districts, some retail spaces have remained vacant for multiple months or even years. These empty storefronts can lead to decreased foot traffic, hurting brick-and-mortar prospects and making city streets less safe, say Prop D advocates.

If the ordinance passes, San Francisco will be one of the first major U.S. cities to take a punitive taxation approach to combating empty storefronts. Washington, D.C. implemented a similar measure in 2011, which applied to residential real estate in addition to commercial properties.

Amid an evolving and increasingly digital retail environment, San Francisco is hardly the only U.S. city to have empty storefronts. A report released in 2019 by New York City Comptroller Scott Stringer showed that the vacancy rate in the Big Apple has risen by about 50% over the past decade, spurred by rent hikes and the growth of e-commerce. Shopping mall vacancies have risen across the country, according to a January report from Reis Moody’s Analytics, and more units were vacant at the end of 2019 than in at least two decades.

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